CHEQUE BOOK

I took a loan to pur­chase a prop­erty in 2012. Since con­struc­tion is still on and I am pay­ing the pre-EMIs, I want to know if I am el­i­gi­ble for tax ben­e­fits. The bank has in­formed me that I will be al­lowed a re­bate on af­ter the con­struc­tion is com­plete. Will I have to con­tinue pay­ing the pre-EMIs if con­struc­tion is de­layed? Please ad­vise.

- Se­mant Ahuja As­sum­ing that your home loan is a con­struc­tion-linked one, and you are pay­ing a pre-EMI or sim­ple in­ter­est till such time that you get the pos­ses­sion of the flat, the en­tire in­ter­est, whether in the form of pre-EMI in­ter­est or part of EMI pay­ments, can be claimed in five equal in­stall­ments start­ing from the year of com­ple­tion of con­struc­tion.

If it is a self-oc­cu­pied prop­erty and con­struc­tion is com­pleted by March 2018, then the over­all limit for de­duc­tion un­der sec­tion 24B is ₹ 2 lakh, in­clud­ing the in­ter­est for the cur­rent year. For self-oc­cu­pied prop­erty where con­struc­tion is not com­pleted by March 2018, the limit will be lower at ₹ 30,000. If the prop­erty is let-out, then you can claim the en­tire in­ter­est payable as a de­duc­tion with­out any up­per limit.

You will have to con­tinue pay­ing the pre-EMI to avoid be­com­ing a de­faulter. The builder may not com­pen­sate for the losses due to de­lay in con­struc­tion un­less spec­i­fied by him in the agree­ment. In case of in­or­di­nate de­lay you can ap­proach the con­sumer fo­rum for re­dres­sal. The choice of builder is clearly for you to ex­er­cise even if the builder is pre-ap­proved by the bank. Can I take a home loan from a rel­a­tive? I un­der­stand that in such a case only the in­ter­est com­po­nent will be con­sid­ered for tax ex­emp­tion. What doc­u­ments will I re­quire for the pur­pose?

- Raghav Sharma You can take a home loan from your rel­a­tive and claim tax de­duc­tion ben­e­fits for in­ter­est payable on the loan. No de­duc­tion is avail­able for the prin­ci­pal pay­ment un­der Sec­tion 80 C.

If re­quired, dur­ing the as­sess­ment pro­ceed­ings, you will need to pro­vide proof that the loan given by the rel­a­tive was used for the pur­pose of ac­quir­ing, con­struct­ing and ren­o­vat­ing the house prop­erty. You will also need to ob­tain a cer­tifi­cate from your rel­a­tive broadly on the lines that a bank gives for tax de­duc­tion pur­poses if the prop­erty is self-oc­cu­pied. What are the doc­u­ments needed once the bank has sanc­tioned the home loan? Do all orig­i­nal doc­u­ments need to be sub­mit­ted?

-Man­jit Singh All orig­i­nal doc­u­ments re­lated to the prop­erty will have to be given to the bank. You can keep a pho­to­copy for your­self. You need to get an ac­knowl­edg­ment for the orig­i­nal doc­u­ments sub­mit­ted to the lender and taken in their cus­tody in the form of a re­ceipt.